Chinalco deal remains compelling for Rio

Rio Tinto says its rising share price has not made the planned $US19.5 billion
($A26.1 billion) deal with Chinese state-owned company Aluminium Corporation of
China (Chinalco) any less attractive.
Rio Tinto global head of strategy Doug Ritchie told a Committee for Economic
Development of Australia (CEDA) luncheon that Chinese investment was important for
Australia's long-term exports.
It was a myth that foreign investment takes wealth from a country, Mr Ritchie told
the CEDA gathering.
"Research shows that for every dollar of income generated in Australia 95 cents
remains in Australia and only five cents is sent overseas," he said.
After the function, Mr Ritchie told journalists the planned deal with Chinalco was
just as attractive as when the deal was struck in February when the share market was
more volatile.
"I see no reason why not," Mr Ritchie said when asked about whether the investment
deal was still as compelling as a few months earlier.
Some investors had been unhappy that Chinalco was getting an overly attractive
offer, which if approved by regulators and Rio Tinto shareholders will take the
Chinese company's stake in Rio Tinto to 18 per cent, from nine per cent.
Others have said Chinalco may have too much influence on iron ore prices.
Federal Opposition Leader Malcolm Turnbull said recently he was opposed to the
Chinalco deal in its current form.
Mr Ritchie on Thursday refused say how he felt after hearing Mr Turnbull's comments,
but said he had no idea what aspects of the deal the Opposition Leader Malcolm
Turnbull would like altered.
Mr Ritchie ruled out speculation that Rio Tinto may try and alter the deal to limit
Chinalco's stake to about 15 per cent to appease shareholders.
He said also there were no fresh plans to revive a joint venture proposal between
Rio Tinto and BHP Billiton in the Pilbara region of Western Australia.
Mr Ritchie sound a word of caution about the economic outlook, saying it was too
early to know whether international stability had returned to markets.
"The fact that the Chinese stimulus package may show some signs of biting is
encouraging," he said.
"But I do note that Australia's equally largest trading partner - Japan, has just
fallen off a cliff."